Following the train derailment that devastated Lac-Megantic, the Canadian Transportation Agency will review how it determines minimum insurance requirements for railways.

In an email to Canadian Insurance Top Broker, Jacqueline Bannister,a CTA spokeswoman said that “The tragic derailment in Lac-Megantic has raised important questions regarding the adequacy of third party liability insurance coverage to deal with catastrophic events, especially for smaller railways.”

The train that derailed in Lac-Megantic on July 6 was operated by Montreal, Maine & Atlantic. It has been reported that the rail company had only $25 million in third-party liability insurance at the time of the accident, but the environmental cleanup costs alone are expected to be at least $200 million.

“Increasing shipments of crude oil and other hazardous goods by rail highlight the need to determine how best to ensure that railways, small and large, have appropriate levels of third party liability coverage, including for possible catastrophic events such as Lac-Megantic,” said Bannister.

In August, the Agency announced that it will launch consultations with the rail industry and stakeholders this fall to determine the adequacy of current minimum insurance requirements for railways.

Bannister added that the insurance industry will be part of these discussions.